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About This Blog
Welcome to the Snell & Wilmer real estate litigation blog. Check back here often for useful news and information about current topics involving real estate litigation. We hope that you will find the blog both timely and helpful, and we invite you to join the discussion by posting comments about the articles and contacting the authors with your thoughts about the posts.
Real Estate Litigation Group Members and Blog Contributors
- Bob Henry
- Kevin Parker
- Matt Fischer
- Adam Lang
- Cory Braddock
- Benjamin Reeves
- Erica Stutman
- Patrick Paul
- Rick Erickson
- Ginny Olmstead
- Neal McConomy
- Michael E. Lindsay
- Bob L. Olson
- Nathan G. Kanute
- Sean M. Sherlock
- Lyndsey Torp
- Anthony Carucci
- Luke Mecklenburg
- Jon Frank
- Kevin Walton
- Lauren Munsell
- Lauren Podgorski
- Addy Colton
- John Sarager
- Jenna Le
- Ian Douglas
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Recent Posts
- Arizona Governor Ducey’s Executive Order on Residential Eviction Actions
- A Landlord’s Guide to California’s New Statewide Rent Control Laws
- If You Purchase a House at an HOA Lien Foreclosure, Are You Entitled to Excess Sale Proceeds?
- Airbnb Declares End to Party!
- Short-Term Rental Legislation & Litigation On the Way!
Topics
- Anti-deficiency Statute
- Bankruptcy
- Commercial Real Estate Industry
- Construction and Development
- Environmental
- Evictions
- Foreclosures
- Guaranty Contracts
- Judgment Liens
- Medical Marijuana
- Real Estate and Bankruptcy
- Real Estate Appraiser Litigation
- Real Estate Broker Litigation
- Real Estate Purchase/Sale Transaction Litigation
- Real Estate Receivers
- Statutes Affecting Real Estate
- Title Insurance
- Uncategorized
- Zoning
Arizona Governor Ducey’s Executive Order on Residential Eviction Actions
By: Bob Henry
As part of the State of Arizona’s response to the current public health crisis, on March 24, 2020, Arizona Governor Ducey issued Executive Order 2020-14, titled “Postponement of Eviction Actions.” A copy of the Executive Order is linked here: https://azgovernor.gov/executive-orders Residential landlords considering taking any action against tenants, including evictions, should be aware of this Order before proceeding.
In summary, the Order effectively requires all Arizona law enforcement officers who are typically charged with enforcing “eviction action orders” (from Arizona courts) to “temporarily delay enforcement” of such orders in various circumstances, including for tenants who are quarantined, or who are residing with others who are quarantined, because of COVID-19 (including self-quarantines pursuant to orders from licensed medical providers) or for tenants who have a health condition that “makes them more at risk for COVID-19 than the average person.” The Order also requires such actions to be delayed if the tenant has “suffered a substantial loss of income resulting from COVID-19” due to job loss, reduction in compensation, and similar economic problems arising out of the pandemic. … Read More »
Author:
Bob Henry
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Tagged Arizona residential evictions. Executive Order 2020-14
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Airbnb Declares End to Party!
By Patrick Paul
As municipalities around the country evaluate changes to their respective codes in an effort to exert greater control over bad actors in the vacation rental market, Airbnb announced on November 2nd that it is banning party houses. The move comes in response to the shooting deaths of five people at a Halloween party hosted at an Airbnb rental house in Orinda, CA. CEO Brian Chesky announced on Twitter that starting November 2, Airbnb would ban “party houses” and redouble the company’s efforts to “combat unauthorized parties and get rid of abusive host and guest conduct.” twitter.com/bchesky
The four-bedroom rental reportedly had been rented on Airbnb by a woman who advised the owner her family members had asthma and needed to escape smoke from a wildfire burning in Sonoma County about 60 miles north of Orinda earlier in the week. … Read More »
Author:
Patrick J. Paul
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Tagged Airbnb, mansion party, nuisance party, party house
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That’s Common Knowledge! Failure to Designate an Expert Witness in a Professional Negligence Case is Not Fatal Where “Common Knowledge” Exception Applies
By: Lyndsey Torp
In reversing summary judgment for defendants, the California Fourth District Court of Appeal recently held that homeowners suing their real estate broker for negligence did not need an expert witness to establish the elements of their causes of action. Ryan v. Real Estate of the Pacific, Inc. (2019) 32 Cal. App. 5th 637. Typically, expert witnesses are required to establish the standard of care in professional negligence cases. But in Ryan, the court of appeal held that the “common knowledge” exception applied despite this general rule, because the conduct required by the particular circumstance of the case was within the common knowledge of a layman.… Read More »
Author:
Lyndsey Torp
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Tagged brokers, common knowledge, experts, professional negligence, real estate litigation, summary judgment
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What If Your CCP 998 Offer is Silent on Costs?
By: Tony Carucci
In California, the “prevailing party” in litigation is generally entitled to recover its costs as a matter of law. See Cal. Code Civ. Proc. § 1032. But under California Code of Civil Procedure section 998, a party may make a so-called “offer to compromise,” which can reverse the parties’ entitlement to costs after the date of the offer, depending on the outcome of the litigation. Cal. Code Civ. Proc. § 998. The potential payoff of a 998 offer is that “If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant’s costs from the time of the offer.” Cal.… Read More »
Author:
acarucci
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Tagged commercial real estate, construction, contractor, developer, foreclosure, Guarantor, guaranty, real estate, real estate litigation
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When Does a Contractor Legally Abandon a Construction Project?
Lately, we’ve been spending more time as litigators pursuing and defending claims of abandonment against contractors. It has become apparent that abandonment is often misinterpreted in its legal meaning and effect. Here are some thoughts on abandonment to consider.
On its face, the concept of abandonment is simple enough. For any number of reasons, a contractor abandons a project when the contractor stops showing up. Abandonment is major concern for all players on the project because it causes critical path delays and significant costs to replace the contractor with another contractor, many times at a much higher cost than the original contractors’ bid.… Read More »
Author:
Rick Erickson
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Tagged abandon, abandonment, breach, breach of contract, claims, construction, construction litigation, contract, contractor, developer, legal excuse, licensing, owner, Registrar of Contractors, subcontractor
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California Supreme Court Hands Victory to Private Property Owners Over Public Use
By: Sean M. Sherlock
In 1970 the California Supreme Court held that, under certain circumstances, private property owners impliedly dedicate their property to the public if they permit the public to use it. Gion v. City of Santa Cruz (1970) 2 Cal.3d 29. This holding was controversial, and the next year the California Legislature enacted Civil Code section 1009 limiting the public’s ability to permanently use private property through an implied dedication.
In the 40-plus years since then, the lower courts have wrestled with the issue of whether the statute limiting implied dedication applies only to recreational uses by the public, or also to nonrecreational uses.… Read More »
Author:
Sean M. Sherlock
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Tagged implied dedication, private property, public use
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Does Your 998 Offer to Compromise Include Attorneys’ Fees and Costs?
In California, the “prevailing party” in litigation is generally entitled to recover its costs as a matter of law. See Cal. Code Civ. Proc. § 1032. But under California Code of Civil Procedure section 998, a party may make a so-called “offer to compromise,” which can reverse the parties’ entitlement to costs after the date of the offer, depending on the outcome of the litigation. Cal. Code Civ. Proc. § 998. The potential payoff of a 998 offer to compromise is explained in section 998(c)(1):
… Read More »If an offer made by a defendant is not accepted and the plaintiff fails to obtain a more favorable judgment or award, the plaintiff shall not recover his or her postoffer costs and shall pay the defendant’s costs from the time of the offer.
Author:
acarucci
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Tagged commercial real estate, real estate litigation
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Arizona Supreme Court Holds a Credit Bid at a Trustee’s Sale Should Not be Credited to a Title Insurer Under a Standard Lender’s Title Policy To the Extent the Bid Exceeds the Collateral’s Fair Market Value
The Arizona Supreme Court recently addressed what impact, if any, a lender’s credit bid at an Arizona trustee’s sale has on an insurer’s liability under Sections 2, 7 and 9 of the standard’s lender’s title policy (“Policy”), holding in Equity Income Partners, LP v. Chicago Title Insurance Company, 241 Ariz. 334, 387 P.3d 1263 (February 7, 2017) as follows:
- Section 2 of the Policy, entitled “Continuation of Insurance,” not Section 9, entitled “Reduction of Insurance; Reduction or Termination of Liability,” applies when a lender acquires property at a trustee sale by “either a full- or partial-credit bid” since Section 2 directly addresses the existence and amount of coverage in such circumstances.
Author:
Richard Herold
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Tagged credit bid, Lender's title insurance, trustee's sale
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What Do I Do With This Stuff? Dealing With Abandoned Property After Foreclosure
By: Lyndsey Torp
You’ve successfully foreclosed on a commercial building in California, and, thankfully, the borrower moved out after foreclosure or after a period of tenancy. But the borrower left behind all sorts of property – furniture, filing cabinets, records, and other assorted property. While you may be tempted to just toss it all in the dumpster, doing so may subject you to liability. There are several statutes that you should consider when determining how to handle the abandoned property.
Statutory Options for a Landlord
A landlord-tenant relationship may arise following foreclosure if, for example, the owner of the property accepts rent from the former owner.… Read More »
Author:
Lyndsey Torp
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Tagged abandon, abandoned property, foreclosure, lost property, personal property, records
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Developer Awarded Cost of Preparing Administrative Record in CEQA Lawsuit
Lawsuits under the California Environmental Quality Act (“CEQA”) typically proceed as petitions for administrative mandamus. This means the petitioner is asking the court to review an agency’s decision and ultimately issue a mandate directing the agency to set aside its decision. In this respect the court acts like an appellate court, reviewing the agency’s decision. There are no witnesses or trial exhibits or jurors or opening statements. The court reads the parties’ briefs, hears their arguments, and makes its decision based on the evidence in the administrative record of proceedings.
The administrative record is often voluminous. It includes not only the environmental reports, but also all project application materials, staff reports and related documents, public notices, written comments and responses, all evidence or correspondence submitted to or relied upon by the agency, hearing transcripts, written findings, and more. … Read More »
Author:
Sean M. Sherlock
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Tagged administrative record, CEQA, costs of suit
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California’s One-Action Rule May Apply to Federal Lenders
California’s one-action rule provides that “[t]here can be but one form of action for the recovery of any debt or the enforcement of any right secured by mortgage upon real property or an estate for years therein . . . .” Cal. Code Civ. Proc. § 726(a). In other words, the one-action rule prescribes that the only process for recovery of a debt secured by a mortgage or deed of trust is to foreclose on the lien. The rule aims to prevent a multiplicity of actions and vexatious litigation, and to force a beneficiary to look to all of the security as the primary fund for payment of a debt before looking to the trustor’s other assets.… Read More »
Author:
acarucci
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Tagged anti-deficiency, commercial real estate, deficiency, foreclosure, foreclosures, Guarantor, guaranty, one-action rule, real estate, real estate litigation, real property
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California Case Deals with Nuisance Lawsuit Intended to Delay Foreclosure
A recent California case provides good precedent for dealing with nuisance lawsuits that are intended to delay valid foreclosures. In Brown v. Deutsche Bank National Trust Company —Cal.Rptr.3d—, 2016 WL 2726229 (May 9, 2016), plaintiff sued defendants to stop them from foreclosing on her home. The trial court sustained defendants’ demurrer without leave to amend, and dismissed plaintiff’s complaint. The court of appeal affirmed.
In 2004, plaintiff took a $450,000 home loan from Washington Mutual Bank. Washington Mutual failed in 2008, and the Federal Deposit Insurance Corporation (“FDIC”) was appointed its receiver. The FDIC sold many of Washington Mutual’s assets, including loans and mortgage servicing rights, to JPMorgan Chase Bank (“Chase”). … Read More »
Author:
Sean M. Sherlock
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Tagged demurrer, foreclosure, judicial notice
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Property Taxes: A Shopping Center May Not Always be a Shopping Center
By: Rick Herold, Craig McPike & Ben Reeves
In the world of real property taxes, Valuation + Classification = Assessed Valuation. Sounds simple, right? The County Assessor determines the first factor, valuation (subject to certain guidelines under applicable Arizona law). The Arizona State Legislature determines the second factor, the property’s legal classification and corresponding assessment ratio (i.e., tax rate). Given the wide disparity in assessment ratios, classification can be a major issue for taxpayers.
Recently, the Court of Appeals confirmed that a shopping center for valuation purposes may not be a shopping center for classification purposes. Scottsdale/101 Associates LLC v.… Read More »
Author:
Richard Herold
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Tagged movie theater, real estate, shopping center, tax appeal, valuation, zoning
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Federal Courts to Apply More Protective State Law when Analyzing Validity of Pre-dispute Jury Trial Waivers in Diversity Jurisdiction Cases
By Anthony J. Carucci
The Ninth Circuit Court of Appeals recently held that federal courts sitting in diversity jurisdiction must apply the underlying state law to determine the validity of pre-dispute jury trial waivers where the state law is more protective than the federal law. In re Cnty. of Orange, No. 14-72343, 2015 WL 1727240, at *4–5 (9th Cir. Apr. 16, 2015).
Facts/Procedural History
In 2007, plaintiff County of Orange (the “County”) hired defendant Tata America International Corporation (“Tata”) to develop a property tax management system. Id. at *5. In 2008, the parties entered into a contract for that purpose, which included an unambiguous jury trial waiver.… Read More »
Guarantor Waivers Narrowed
By: Lyndsey A. Torp and Sean M. Sherlock
A general waiver by a guarantor of “all defenses” does not actually waive “all defenses.” California Bank & Trust v. Del Ponti, — Cal.Rptr.3d —, 2014 WL 6908141 (Cal.App. 4 Dist.). That was the holding in a recent opinion wherein the California Court of Appeal affirmed judgment against a lender, holding that the bank could not recover on its loan guaranties because it had breached the underlying loan agreement.
In California Bank & Trust v. Del Ponti, borrower obtained a construction loan from Vineyard Bank (which was later assigned to California Bank & Trust) to develop a townhome project, with guaranties from two principals of the borrower. … Read More »
Author:
Sean M. Sherlock
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Tagged defense, Guarantor, guaranty, waiver
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California Case Requires Arbitration Despite Lack of Actual Controversy
By: Lyndsey A. Torp and Sean M. Sherlock
For parties to litigate a contract dispute in a court of law, the parties’ disagreement must have ripened into an actual controversy presenting more than a mere academic difference of opinion. But under a recent California Court of Appeal opinion, no actual controversy is required to compel arbitration over a disagreement. Bunker Hill Park Limited v. U.S. Bank National Association, — Cal.Rptr.3d —, 2014 WL 6684796 (Cal.App. 2 Dist.). To avoid being compelled to arbitrate purely academic disagreements, parties should draft their arbitration clauses to limit arbitrable disputes to those that have ripened into actual controversies.… Read More »
Author:
Sean M. Sherlock
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Tagged arbitration, justiciability, ripeness
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Nevada Supreme Court adds New Elements to Constructive Eviction Claims.
By Bob L. Olson
Nevada, like many jurisdictions, has recognized the ability of a tenant to vacate property if it becomes unfit for occupancy for the purpose for which it was leased. This is commonly known as a “constructive eviction.” Traditionally, to establish a claim for or defense of constructive eviction, the tenant had to prove the following three elements:
1. The landlord either acted or failed to act;
2. The landlord’s action or inaction rendered the whole or a substantial part of the premises unfit of occupancy for the purpose for which it was leased; and
3. The tenant must actually vacate the property within a reasonable time.… Read More »
Author:
Bob L. Olson
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Tagged commercial lease, constructive eviction, evict, eviction, landlord, lease, tenant
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Easements Made Easier: Building Pipelines with the Power of Eminent Domain Under the Natural Gas Act
By: Richard H. Herold
Any person or entity seeking to construct a natural gas pipeline and successful in obtaining a certificate of convenience and necessity from the Federal Energy Regulatory Commission may exercise the power of eminent domain to obtain easements across private property when those easements are necessary and cannot be obtained consensually (by contract) from the landowners. Columbia Gas Transmission, L.L.C. v. 76 Acres More or Less, 2014 WL 2960836 (D. Md. June 27, 2014). the Columbia Gas Court recently held that (1) the property’s legal description need not be attached to sufficiently identify the property to be condemned, and (2) even in the absence of a federal condemnation statute authorizing immediate possession of the property, the condemning plaintiff may obtain an order to take immediate possession of the property since it would be wasteful and inefficient to skip over one or more parcels in the construction process – only if the condemning plaintiff is capable of satisfying the requirements for preliminary injunctive relief under Fed.R.Civ.P.… Read More »
Author:
Richard Herold
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Tagged condemnation, easements, eminent domain, natural gas act, pipelines
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Guarantors Score Two Victories Before the Nevada Supreme Court.
By: Bob Olson and Nathan Kanute
On May 29, 2013, the Nevada Supreme Court issued two decisions that all real estate lenders need to be aware of because they have the potential to eliminate the ability of a lender to recover a deficiency judgment from a guarantor.
In Nevada it is common for lenders to commence foreclosure proceedings and, at the same time, sue all guarantors that have waived the benefit of Nevada’s one-action rule for the full amount of the debt they guaranteed. Often the foreclosure sale will occur before lender obtains a judgment against the guarantor. In Lavi v.… Read More »
Author:
Bob L. Olson
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Tagged deficiency, foreclosure, Guarantor, one-action rule
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Nevada Supreme Court and District Court Issue Decisions Regarding Nevada’s Limitations on Deficiency Judgments.
By: Bob Olson and Nathan Kanute
In 2011 the Nevada Legislature enacted Assembly Bill 273 (“AB 273”) which amended NRS 40.459 by limiting deficiency judgments to the difference between the amount the lender paid to acquire the loan or obligation and the larger of the market value of the property or the amount paid for the property at a foreclosure sale. As one can imagine, a large number of borrowers and guarantors have tried to take advantage of this recent law to limit or in some cases eliminate their liability for deficiencies. Creditors, on the other hand, have cried foul by arguing that, among other things, the law cannot be applied retroactively, it impairs the value of their pre-enactment paper and violates the Contracts Clauses of both the United States and Nevada Constitutions. … Read More »
Author:
Bob L. Olson
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Tagged AB 273, anti-deficiency, deficiency, Eagle SPE, foreclosure, Sandpointe
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The Registrar is Changing the Game for Complaints Against Arizona Contractors
By Rick Erickson http://www.swlaw.com/attorneys/rick_erickson
Sweeping changes at the Registrar of Contractors have the construction and real estate industries concerned and curious. The Registrar recently received some poor performance reports by the Auditor General and State Ombudsmen. As a result, the Registrar overhauled its procedures for handling complaints and adjudicating contested cases against Arizona contractors. You should be following these changes before the Registrar rolls out its new approach this summer.
The Registrar regulates contractor licensing and enforcement of workmanship standards against thousands of licensees throughout Arizona. In doing so, the Registrar dictates administrative remedies available to property owners on residential and commercial projects. … Read More »
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Rick Erickson
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Tagged administrative remedies, contractor complaints, contractor licensing, enforcement, Registrar of Contractors, regulation of contractors
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A Section 363 Sale Does NOT Transfer Property Free and Clear of an Equitable Servitude
By: Ben Reeves
Sales in bankruptcy court under 11 U.S.C. § 363 (called “363 Sales”) are often used to sell property during a bankruptcy case. The 363 Sale process provides an efficient procedure to liquidate estate property and offers several advantages to sales outside of bankruptcy – including the highly desirable ability to sell property “free and clear” of interests. The procedure is used so regularly and with such great success that parties often expect 363 Sales to transfer property free and clear of all interests as a matter of course. That result, however, is not always the case.
In re Hassen Imports Partnership reminds us that a 363 Sale does not automatically transfer title free and clear of all interests in real property. … Read More »
Author:
Ben Reeves
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Beyond Real Estate: Publicly Traded Homebuilders (And Other Public Companies) Must be Aware of Cybersecurity and Data Breach Disclosure Requirements Applicable to SEC Filings
Generally speaking, publicly traded homebuilders and other public companies must disclose material information in their SEC filings. “Information is considered material if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision or if the information would significantly alter the total mix of information available.” Basic v. Levinson, 485 U.S. 224 (1988)
As the agenda of hackers and other criminals advances, so has the issue of cybersecurity, focusing on what risks exist in the company’s cybersecurity defenses and, if there has already been a data breach incident, whether the scope of the breach and the resulting adverse consequences (which may include regulatory investigations, SEC or FTC enforcement actions, securities class actions, and/or derivative lawsuits) is material and must be reported in SEC filings.… Read More »
Not All Property Acquired Post-Petition is Safe from Creditors
By: Ben Reeves
Although property obtained by a debtor after filing for bankruptcy is usually safe from creditors, a recent case from the Ninth Circuit Bankruptcy Appellate Panel allowed a Chapter 7 Trustee to sell real property obtained by the debtors post-petition.
In In re Jones, a debtor’s grandmother signed and recorded a “Beneficiary Deed” that transferred certain real property to the debtor effective upon the grandmother’s death. A year and a half after the grandmother recorded the deed, the debtor filed for bankruptcy. Three days after he filed for bankruptcy, the grandmother passed away.
The Chapter 7 Trustee attempted to sell the inherited property, but the debtor objected. … Read More »
Author:
Ben Reeves
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Tagged bankruptcy, beneficiary deed, property of the estate, real estate litigation
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ABOR Fences Out a Property Owner’s Quiet Title Action
By: Cory L. Braddock
In May of last year, the Arizona Court of Appeals determined that “the statute of limitations does not run against a plaintiff in possession who brings a quiet title action purely to remove a cloud on the title to his property.” Cook v. Town of Pinetop-Lakeside, 661 Ariz. Adv. Rep. 31 (App, May 28, 2013). The Cook decision was discussed in detail in our prior blog post entitled The Clock Doesn’t Tick-Tock for Owners in Possession. Now, the Arizona Court of Appeals, presumably with some regret, has been forced to address real property statute of limitations issues for the second time within six months. … Read More »
Author:
Cory Braddock
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Tagged petition to quiet title, statute of limitation
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Bidding on State Land Trust Leases: Even the Top Revenue-Generating Bids Must be Balanced Against Qualitative “Best Use” Factors Designed to Protect the Land
The Court of Appeals recently held that that the Commissioner of the State Land Trust Department properly balanced Wildearth Guardians, Inc.’s higher revenue-generating bid against “best use” qualitative factors set forth in the Arizona Administrative Code. As a result, the appellate court affirmed the Commissioner’s decision to award a 10-year grazing lease to the Knights for their 28-year record of stewardship and protection of the leased land near Springerville, Arizona, despite the $79,344 in additional revenue over 10 years which would have been generated for the benefit of Arizona’s public schools by the Wildearth Guardian’s bid. Wildearth Guardians, Inc.… Read More »
Author:
Richard Herold
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Tagged Grazing Leases, Real Estate Leases
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A.R.S. § 33-814(A) and Bankruptcy Proofs of Claim: To File or Not to File…Conflicting Cases Leave Creditors With No Clear Answer
By: Ben Reeves
Under Arizona law, does a secured creditor need to file a deficiency action within 90 days after a trustee’s sale to preserve the unsecured portion of its claim in a bankruptcy case? Or is filing (or amending) a proof of claim sufficient? Two recent cases out of Arizona provide conflicting answers.
The two cases reached the issue based on a similar fact pattern. In both cases, the debtors stipulated to relief from the automatic stay to allow a trustee’s sale to occur. In both cases, the sales resulted in substantial, unsecured deficiencies. In both cases, the trustees objected to the unsecured portion of the unsecured claims based on the lenders’ alleged failure to comply with A.R.S.… Read More »
Author:
Ben Reeves
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Tagged A.R.S. § 33-814, bankruptcy, In re Rader, In re Wright, Proof of Claim, trustee's sale, unsecured claim
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